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The effect of diversification on auditor selection in business groups: A case from Taiwan

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  • Chang, Wen-Ching
  • Lin, Huey-Yeh
  • Koo, Meihua

Abstract

This study examines effects of group diversification on the number of industry-specialist auditor selections in business groups. Using 2003–2010 Taiwanese business groups as the sample, our results show that unrelated diversification is significantly positively associated with the number of industry-specialist auditor selections in business groups, including audit firms and audit partners. Related diversification is significantly negatively associated with the number of industry-specialist audit partner selections in business groups. Overall, group member firms select different industry-specialist audit firms because of industry diversity and the same industry-specialist audit partners because of industry similarity.

Suggested Citation

  • Chang, Wen-Ching & Lin, Huey-Yeh & Koo, Meihua, 2017. "The effect of diversification on auditor selection in business groups: A case from Taiwan," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 422-436.
    • Handle: RePEc:eee:reveco:v:49:y:2017:i:c:p:422-436
    DOI: 10.1016/j.iref.2017.03.003
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    More about this item

    Keywords

    Auditor selection; Industry specialist; Business group; Related diversification; Unrelated diversification;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing

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